The United States has challenged the authority of the World Trade Organization by ignoring a WTO ruling, and such a move may escalate trade tension with China, experts said on Wednesday.
The WTO announced on Tuesday that the revised countervailing measures imposed by the US on imports of certain products from China were inconsistent with WTO laws.
However, the US failed to comply with the WTO ruling and accused China of “using State-owned enterprises to subsidize its economy”.
The WTO mechanism is what members use to settle trade disputes, and countries in most cases abide by the rulings made by the organization, said Xue Rongjiu, deputy director of the China Society for WTO Studies.
“If member economies don’t follow this procedure, the rule-based global multilateral system will be damaged and threatened by protectionism,” Xue said, adding that under such circumstances, some members may be forced to also use trade as a geopolitical weapon to ensure their interests.
Upholding the findings of a WTO dispute panel made public in March 2018, a WTO appellate body ruled that the US acted inconsistently with its provisions of subsidies and countervailing measures agreement.
The Ministry of Commerce urged the US to take immediate and concrete action to “correct the wrong practices” in the anti-subsidy investigation against China and to create a fair and stable international trading environment for companies from both countries.
“Although both the panel of experts and the appellate body in this case have ruled that the US countervailing measures violate WTO rules and asked the US to correct its action, the US didn’t comply with the WTO ruling and continued to adopt trade remedy measures against Chinese products in recent years,” the ministry said in a statement on Tuesday.
The ministry said the ruling of the WTO appeals body proves that the US has seriously compromised the fairness of the international trading environment by violating WTO rules and repeatedly abusing the power of trade remedy measures.
Among the findings, the appellate body said the US Department of Commerce had failed to explain, in several of the countervailing proceedings, “how government intervention in the market resulted in domestic prices for the inputs at issue deviating from a market-determined price”, and emphasized that “an investigator’s determination of how prices in markets are in fact distorted as a result of government intervention must be based on positive evidence”.
China has always advocated resolving economic and trade differences through dialogue and consultation and has always been sincere, said Foreign Ministry spokesman Geng Shuang at a regular press briefing on Wednesday.
The US thinks there is a long way to go before reaching a trade agreement with China, but in China there is a saying that a journey of a thousand miles begins with a single step, said Geng, adding that the US needs to be determined to achieve a win-win agreement.
New tariffs will only set up new barriers to economic and trade consultations between China and the US, he said in response to the US threat of imposing additional tariffs on Chinese exports.
China has always respected multilateral trade rules and opposes the abuse of trade remedies. The country has not only defended its legitimate rights and interests, but also safeguarded the authority of the multilateral trading system and the seriousness of WTO rules, said Wei Jianguo, vice-chairman of the China Center for International Economic Exchanges.
The appellate body’s ruling will place additional pressure on the next round of China-US trade talks and bring uncertainty to the fragile world economy, Wei said.
China appealed to the WTO in 2012 to contest US anti-subsidy tariffs on Chinese exports including several metal products, steel tire rims, solar panels, wind power equipment and aluminum goods.
China challenged various aspects of certain countervailing duty investigations and the preliminary and final determinations that led to the imposition of countervailing duties.